As of December 14, 2007 any property that is being advertised for sale in England and Wales are going to require a Home Information Pack (HIP).
Purpose of the Home Information Packs
The Home Information Packs were introduced by the British government in an effort to lessen the rising amounts of incomplete house sales. Before the Home Information Packs was introduced, most of the details needed by the purchaser could not be gotten until an offer to buy had been made. This situation created issues for the buyer in relation to the state of the property and the legality of the documents presented by the seller. In most cases money would already have been spent before this information is received. The result of this is usually an attempt by the purchaser to renegotiate the sale agreement with the seller, which can lead to delays in closing the purchase and eventually the deal falls through. These failed transactions have been estimated to have incurred losses for buyers of over Â£1,000,000 every day.
The different costs associated with housing purchases include legal fees, searches and valuations. In order to bring about a reduction in the level of losses, both financial and in resources used, when a housing transaction is terminated, the government has sought to speed up the process through reducing loss time. A good idea in theory, the execusion though has been rather poor.
The searches performed on a property are usually only done by the purchasors solicitor, but now these have to be done as part of the HIP from the seller. This is a good idea however the drawbacks are that these searches are only valid for 6 months and there is NO OBLIGATION on the purchasors solicitors side to accept these searches, thus duplicating cost as the purchasors solicitor does their own searches.
Contents of the Home Information Packs
The Home Information Packs contain vital information about the property being sold, including the following:
â€¢ Contents index
â€¢ A statement which summarises the terms of sale
â€¢ A new homes warranty if needed
â€¢ Proof of title
â€¢ Energy Performance Certificate
â€¢ Completed searches, which includes local authority, drainage and water search
â€¢ Commonhold documents if needed
â€¢ Any leasehold documents if necessary
If there are items that should be in the Home Information Pack that is not there, then the contents index should give an explanation for their omission. If there is an agreement to provide the missing documents later, it must be done within twenty-eight days.
HOW buyers and sellers should benefit
Buyers should benefit because the Home Information Pack gives them vital information on the property they are contemplating buying, without having to pay for it and any unexpected surprises when they buy the property. Sellers should also benefit as they avoid the delays associated with misinformation about the property, so the buyer will be making their decision based on adequate and accurate information.
It will take time, but in the long run the HIP’s should benefit buyers and sellers of property.
The Home Information Packs are available from your estate agent and the cost will be added on to the sale fee.